Guaranteed Installment Agreement: When To Consider & How To Request
A Guaranteed Installment Agreement is the easiest of the Installment Agreement to obtain. The reason it is fairly simple to obtain is because it is “Guaranteed” under the law so long as you meet the basic requirements. The type of Installment agreement is only for those taxpayers that have $10k or less in tax debt (excluding penalties and interest) and can pay off the remaining balance in 3 years or generally by the Collection Statute Expiration Date (CSED). Again, this is for individuals only. Your monthly minimum payment can be lower than the $25 minimum on Installment Agreements so long as you pay off your balance in 3 years or less. You are better off paying the most you can per month because you end up saving more in the end (because you pay less interest and penalties).
Some Requirements for Guaranteed Installment Agreements
- All delinquent tax returns in the past need to be filed. If you are considering it for 2010, then you will need to submit your Request for Installment Agreement with the appropriate 1040 form.
- You can make monthly payments to pay off your tax debt in a 3 year time frame or less or generally by the CSED
- You will need to not miss payments during the Installment Agreement period, and you will need to make sure to pay and file on time for subsequent years.
- Owe the equivalent of or less than $10k in taxes owed excluding penalties and interest.
- Over the last 5 years, you (including your spouse if filing jointly) have filed all tax returns on time and paid all taxes due on time, and have no other Installment Agreements present.
- You cannot be in Bankruptcy or had an Offer In Compromise accepted.
How To Request A Guaranteed Installment Agreement
- First Fill out print Form 9465 Installment Agreement Request (read the detailed directions on the form). You can alternatively use the IRS Online Payment Agreement (OPA) which is a lot faster than printing the form and having to mail it. If you want the forms sent to you via snail mail, call 1-800-829-1040. If filling out Form 9465, there is no need to fill out section 5.
- Include a Setup Fee with your first payment (currently $52 for direct debit agreements and $120 for non direct debit agreements). In other words, when you send in your agreement you must include the minimum monthly payment amount you can make (as long as the monthly amount generally equates to the debt being paid in 3 years with interest and penalties). The 52 dollar user fee can be reduced to 43 dollars if you make under a certain amount. If you are trying to reinstate a Installment Agreement in which you broke with miss-payments you will need to include $50 for that user fee.
- It is required that you fill in the amount you can pay each month and the day the IRS expects to receive payment. Remember, the monthly payment must cover interest and penalties and pay back the original balance in 3 years or by the CSED. Typically, the minimum monthly payment calculated by taking the total balance you owe (adding penalties and interest) and dividing it by 30 for 30 months.
- If you don’t use the IRS’s OPA link to request the Installment agreement and instead prefer to mail the form then make note of the address to send it to on Form 9465 because this address varies depending upon which state you live in.
- Send Form 9465 (if not using OPA) with your tax return and attach it to the front of your tax return.